Qantas, Emirates Consider Linking Networks

Qantas confirms that Emirates is one of the airlines it is holding discussions with as it looks for a way to boost its international network through alliances with other carriers.

Such a linkup would presumably see Qantas shift its allegiance from Oneworld partner British Airways to Emirates on routes between Australia and Europe. Qantas would be able to rely heavily on Emirates’ extensive European network, while Emirates would gain greater access to the Australian domestic market.

In a statement to the Australian stock exchange, Qantas confirmed “it is in discussions with a number of airlines about potential alliances … these airlines include Emirates, among others.” A link between the two has been rumored for a while, but this is the first time discussions have been officially acknowledged. The confirmation was apparently prompted by media reports.

Another Middle Eastern carrier, Qatar, could be one of the other carriers Qantas is talking to. In July, Qatar CEO Akbar Al Baker said his carrier was holding discussions with Qantas about a code share partnership that would encompass Australia-Europe routes. At the time, Qantas would not confirm these talks, and its only response was that “we don’t comment on what private discussions we may be having about potential airline partnerships.”

Emirates has a far stronger network into Australia than Qatar. Beginning in November Emirates will fly to five Australian cities from Dubai, whereas Qatar flies to two – Perth and Melbourne.

Qantas currently has a joint services agreement (JSA) with British Airways covering Australia-Europe services. They both fly their own aircraft between London and Sydney via Singapore. Qantas also has a one-stop flight from Melbourne.

Both airlines used to operate one-stop service between the two countries via Bangkok and Hong Kong, but last August they agreed to each focus on their own halves of these routes.

Qantas links to the British Airways European network in London, and also has its own flight to Frankfurt. So reaching most European cities under the JSA requires two stops.

In contrast, Emirates flies directly to more than 30 European destinations from Dubai, which would bring more cities within reach of one-stop service. Qantas would presumably be able to scale back or eliminate its own Frankfurt – and possibly London – flights.

Qantas has said that its international strategy is to rely more heavily on partner airlines. Its rival Virgin Australia has already been pursuing this strategy, forming close partnerships with overseas airlines to establish a “virtual network,” with only a small international fleet of its own. For European services, Virgin Australia is allied with Etihad Airways.

Etihad code shared with Qantas before it signed its strategic partnership deal with Virgin Australia in 2010. At that time, Qantas CEO Alan Joyce said his carrier had turned down Etihad’s overtures for a closer alliance. He said that Qantas was happy to rely on its British Airways relationship for its European links.